The recent shift in enterprise IT – from a locked-in contract model to one that is more service-oriented and available on-demand – has been driven by the flexibility and agility of the cloud. However, one area of the market that has been slow to adapt to the new way of working has been the telecoms and networked service provider sector – mostly because its assets are heavily invested in fixed infrastructure.
“The telecoms industry has not kept up with the pace of innovation,” said Mike South, product manager cloud connectivity and on demand services at Colt Technology, during a web seminar by our sister site Computing, entitled How to demand more from your enterprise network carrier.
“The de facto standard is for multi-year lock, but in the enterprise market we’re seeing a new model emerging where companies don’t have to do that anymore.”
The main driver for this, said South, is the increased use of cloud. A company might want to perform a cloud migration over six months; alternatively, it might want to connect two data centres together for a short period of time; or it could require increased broadband for a matter of a few days.
“The cloud is rubbing off on technologies such as SDN [software defined networking] and NFV [network functional virtualisation],” South went on. “We’re still at the beginning of the journey, but we’re starting to see a more flexible model coming into play.”
Like cloud, which took several years to be accepted as a viable model for business – and which still has its doubters – more flexible networking will not happen overnight, especially given that most organisations are still accustomed to (or tied into) multi-year contracts with their carriers, as shown by Computing‘s research among IT leaders in medium to large organisations.
Luke Braham, IT manager at global staffing agency Red, admitted to being surprised by the number of firms on long-term contracts, saying that his company invested in more flexible connectivity years ago.
“Why every three years, why not renew every year?” he asked, rhetorically. “We scale on everything else these days, so why not scale on bandwidth?”
Red has grown rapidly in the last 18 months, Braham went on, and is very much a cloud-first business meaning that it sees scalability as a key factor in any IT decision.
The reticence of many firms to review their telco contracts may be a relic of linear thinking in organisations whose growth trajectory is less meteoric than Red’s. Nevertheless, the ability to flex is increasingly important to all firms, not just those that are “cloud native” or heavily focused on technology.
South argued that too many enterprises simply accept the status quo, failing to think outside of the multi-year contract box. The market is evolving, he insisted, and new types of virtualisation like SDN and NFV are bringing granular controls and flexibility within the reach of more organisations – but of course they have to know that services are available and believe the switch would be beneficial.
It’s not about cost, South insisted, although for some companies, particularly those that experience peaks and troughs in demand, networking on demand may indeed be cheaper. Rather, it is about consolidation, simplification and automation leading to increased business agility.
“There are efficiencies to be made, but it’s not just a cost efficiency story – it’s a customer journey story as well,” he said.
“There’s an inherent efficiency in transacting with telcos in this way. It’s about interfacing using a web portal; it’s having 20 pieces of information to input rather than 250. There are lots of soft benefits too. It’s just a more efficient model, and if you want to scale it’s very easy.”
South continued: “Let’s say you want a fat 10 Gigabit pipe from your data centre into the Amazon or Microsoft Azure cloud for one week – what are your options now? You could get it upgraded and downgraded but it will take three months. With the new model you just pay for that week. The flexibility is there when you need it.”
The web seminar is now available to view on demand.